US jobless claims edge higher but remain near year-low levels

• Continuing claims rose to 1.91 million, reflecting growing difficulty for job seekers to find new work despite low layoffs
• US employers announced 1.206 million layoffs in 2025, the highest in five years, with tech sector restructuring due to rapid AI implementation
• Job openings fell to 0.91 per unemployed person in November, the lowest ratio since March 2021, with hiring plans down 34% to their weakest level since 2010

Summary: US Jobless Claims Edge Higher but Remain Near Year-Low Levels

Key Data Points:

• Initial jobless claims rose to 208,000 for the week ended January 3, 2026, up from 200,000 the previous week
• Claims came in below economist expectations of 210,000
• Continuing claims increased to 1.91 million (week through December 27) from 1.86 million
• Job openings ratio fell to 0.91 openings per unemployed person in November, down from 0.97 in October—the lowest since March 2021

Labor Market Dynamics:

The US labor market exhibits a "low-hire, low-fire" environment. While layoffs remain historically limited, hiring momentum has significantly weakened due to tariff uncertainty and rapid AI adoption. Hiring plans dropped 34% in 2025 to 507,647—the lowest level since 2010.

Sector-Specific Developments:

Despite stable claims data, Challenger, Gray & Christmas reported 1.206 million planned layoffs in 2025, up 58% year-over-year and the highest in five years. The technology sector led job cuts as companies restructure amid AI implementation, with years of over-hiring contributing to reductions. Federal agencies also announced significant cost-cutting measures.

Market Implications:

The data suggests underlying labor market resilience, though growing concerns emerge around long-term unemployment as job seekers face extended periods without work. The declining job openings ratio indicates a cooling labor market without entering mass layoff territory.

Outlook:

Friday's December jobs report will be critical, with economists expecting 73,000 payroll additions and unemployment declining to 4.5%, providing clearer direction on whether the labor market is stabilizing or entering deeper slowdown.